tv First Business KICU February 7, 2013 4:00am-4:30am PST
lumber luster. what futures traders know about the housing recovery. in today's cover story, how wall street fell through the "safety net" during the financial crisis - and what the goverment is doing about it now. plus, could a 3d printer create a new dimension for tech companies? new details emerge today about boeing's 787 battery trouble. and, the oscars aim to cut the fluff as ad buys turn to gold. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's thursday, february 7th. i'm angela miles. in today's first look: a number of stocks to watch today following earnings: green mountain shares tumbled on lower guidance, yelp reported a
larger-than-anticipated loss, profits at newscorp doubled, and business remains brisk at visa. yahoo and google have an ad deal. the rival internet companies reached an agreement to have google display ads on yahoo sites. the wall street journal reports american airlines and u.s. airways may announce a merger in a week or so. shares of u.s. airways flew higher. and let it snow! ski resort owners in the northeast are thrilled a foot of snow could drop by friday, making for a powder-packed weekend. mark sebastian of option pit mentoring joins us now for a closer look at the market. good morning to you. do you suspect with the strength that we have had in this market, that some people are going to want to take profits here mark? > > you know, maybe, but i wouldn't. i think we are due for a breather here at this 14,000 level in the dow. but there are going to be a lot of investors that see this train that has already left the station and want to get onboard. i think we are going to see an all-time high in the dow in the
next 30 to 60 days. > wow. let's do some bonding: what do you think about the bond market? is this the time to buy there? > > for a short-term trader, yes. i think we have hit a near- term low. but over the long haul, rates are still really low historically. i don't know that i would want to own bonds if i had a 5- to 10-year duration. > what about stocks then? since you are so hot on the stock market, what equities would you buy? > > you know, the area i really like is payment processors: visa, mastercard, american express, and ebay. a lot of people think ebay is an auction company. it is a payment processor. as the consumer comes back and as internet business picks up, all those payment processors are just going to be raking in cash. > thank you for your thoughts. that is mark sebastian of option pit mentoring. have a good day mark. > > you too. traders are closely watching for assurances the housing recovery is real, and latetly they are feeling confident the sector is re- building. one of the commodities traders key in on is lumber. lumber futures went limit-up this week, which means it was a commodity in hot demand. "simply put, the lumber industry was caught by surprise. demand
is back where it was 5 years ago and supply is just not there. it's gonna take some time for that to even out, so we expect plywood prices to remain elevated for the short to intermediate period." add to that plans that are underway at home depot to fill more than 80,000 jobs this spring, a 14% increase over last year. it's because of robust home building and renovating. the government's case against standard and poor's ratings services highlights what some call "a clear conflict of interest." in our cover story, how ratings to evaluate risk became even riskier once those being rated became the ones paying for it. the credit rating business began a hundred years ago, helping investors evaluate risk in railroad bonds. "in the old days, ratings published books. you had to buy a book for the rating. but over time, that evolved into the issuer paying a fee to secure a rating." in 1975, the sec designated the top firms "nationally- recognized," a requirment for investment in some cases,
leaving standard and poor's, moody's and fitch to control 96% of the market. then, the rating agencies became consultants to wall street, coaching how to get the best ratings, then evaluating them. "it's definitely a broken system. it's full of conflicts of interest to consult and then pretend to be objective raters of what they'd constructed." dodd-frank reforms are beginning to address these conflicts, but they cannot undo the harm inflicted on families with money in pension plans, regional banks and credit unions that bought riskier-than- presented investments that failed. "all of the ratings services, everyone relies on these. if they can't trust the data, they're making bad decisions for hundreds of thousands of investors."
a key to the government's case is the claim that there was an ongoing debate within s&p over whether to upgrade computer programs which prosecutors say would have led to harsher ratings - and in turn may have hurt the very companies paying s&p for its research. s&p denies that it used more favorable software in any of the securities listed in the complaint. facebook's rocky, glitchy ipo day last may cost investors $500 million in losses. now, according to the wall street journal, nasdaq, the sec and facebook are in talks about a settlement. and it could include a penalty in the $5- million range.
the securities and exchange commission has received 3,000 whistleblower tips, but critics say it's getting bogged down in bureaucracy. it's part of dodd- frank legislation. supporters hoped awarding whistleblowers would encourage more people to come forward and fight wall street corruption. but, according to marketwatch, the sec has paid out a scant $50,000 in claims. that's despite a fund of $450 million. some say the process takes too long and are hoping senator elizabeth warren may push the program to its full potential. the federal reserve confirms that one of its computer systems was hacked. apparently it was the work of the hacktivist group "anonymous" and targeted an emergency communications system. the fed released a statement saying the exposure was fixed quickly, is no longer an issue and did not affect critical operations of its system. the breach did, however, involve the collection of sensitive data of 4,000 banking officials.
the ntsb says it will release its latest findings today in the investigation of boeing's troubled dreamliner. however, the agency specified the full investigation "could take weeks." the ntsb is looking into "risks" associated with lithium-ion batteries used to power the extensive electrical systems aboard the 787s. reports say boeing is working on a new battery design. defense contractors want a budget deal out of washington. ceos from top defense companies, including pratt & whitney, met with president obama yesterday to talk about the effects severe budget cuts could have on their industry. lawmakers have until march 1st to compromise on a budget. without it, $1.2 trillion in automatic cuts in goverment spending take effect. half is from millitary spending. reports say defense companies are already delaying orders and hiring due to the threat of sequestration. president obama has nominated a business insider to run the department of the interior.
sally jewell, ceo of the successful outdoor equipment company rei, has been nominated for the position. jewell is also a former banker and has worked as an official in the oil industry. she took over rei in 2005, and, if confirmed, will take her knowledge of the outdoors to the interior department. "the secretary of the interior is in charge of overseeing 500 million acres of public land in places like yellowstone and the grand canyon, and protecting our natural heritage for our children and our grandchildren." other notable capitol hill moves: timothy geithner, after departing from his role as treasury secretary, is now joining the council on foreign relations. lance armstrong continues his downhill spin. the discgraced cyclist is now under an active criminal investigation by federal authorities according to a-b-c news. the focus is reportedly obstruction, witness tampering and intimidation. armstrong gave his first interview last month since being stripped of his seven tour de france titles.
the u.s. postal service is cutting down its delivery days. the struggling agency will eliminate mail service on saturdays starting in august. packages will still be delivered, however, and some post offices will stay open on saturdays. look for more changes - politico reports the agency will release a five-year financial plan early next month. in earnings news, investors sized up what they heard from ralph lauren and liked it. the stock gained nearly $10 yesterday as the company reported stronger-than-expected sales, especially during the holidays. the stock is up more than $30 in the past few months. cvs gained customers despite its dispute with rival walgreens. the pharmacy even lifted its forecast, but the stock sold off. and shares of media company time warner rallied $2 on earnings that jumped 51%. the
company recorded record profits from tv and film. distilled spirits now account for more than a third of liquor consumed in the u.s. regulatory changes since 2002, including more states allowing the sale of liquor on sundays, is boosting consumption rates. vodka is the most popular hard liquor, accounting for 32% of all distilled-spirit sales. and with that kind of market share comes more innovation - that is, if you consider vodka flavored with bacon, wasabi or coffee to be innovations. still to come, will "identity thief" steal the show at the box office this weekend? find out later in movies and money. but first, wait until you see this. we'll show you why a new 3d printer could be all the rage in tech and in the stock market. that's next.
all the talk of a housing recovery translated into momentum for boise cascade on its first day of trading. the paper and plywood company made its premiere on the market wednesday and jumped 24% before closing at 26 dollars. today, keep your eyes peeled for ex- one. the 3d printer company is expected to make its way onto the market today. the company will raise about $75 million with shares between 14 and 16 dollars. 3d printing methods similar to those at exone are being embraced by small businesses across the country as a low- cost option for prototype
design. ky sisson takes us to a lab in california that's training the next generation of students in this revolutionary technology. "if used correctly, this technology has the potential to change the game for manufacturing in the united states." the revolutionary manufacturing technology of rapid tech at the university of california-irvine is paving the way for small businesses to produce three dimensional prototypes on a budget. "for the small guy it's a little harder to get access to this technology, and that's kinda what we're here for. we want to give smaller companies access to this technology to let them be more competitive." rapid tech's printers are able to create objects - layer-by- layer - in three dimensions, and can print prototypes within a matter of hours. this saves companies time and money when correcting design flaws, and, more importantly, when going after market share. "first, when a company engages with us, we want to make sure that when they go out to get it manufactured, they have all the correct files and the correct data - all the correct tools to give to the manufacturer. it lets a little company react to
the market like a big company." rapid tech, a non-profit company funded by the national science foundation and saddleback college, is primarily in the business of training students for the workforce. uc-irvine professor dr. mark madou compares this 3d manufacturing revolution to that of the personal computer transformation of the 1980s, when few businesses bought that new technology, and fewer still knew how to use it. "the connection between science and workforce is not there anymore, so we might invent new things and make these new machines, but we don't have the people that can staff them and operate them and that is what we are especially good at. that's the education of these new tools." salar soroori is researching a biomedical project. he says the 3d printing technology offers real cost savings for the healthcare industry. "we can make these discs at very low costs and very fast so that the turn-around time from design to the testing level is very short. we're showing the manufacturing capabilities in the biomedical area and we use this machinery to facilitate that kind of research." the obama administration is proposing to put $1 billion into opening up to 15 new manufacturing innovation institutes to help make
american industry more competitive and encourage investment in the u.s. "they're looking at the drop in gdp and manufacturing and how that has affected that, and they have a very bold and progressive plan to move manufacturing forward." > > rapid tech has helped over 900 companies with their manufacturing needs for parts like these, and ed tackett says that this is only the beginning. "we're starting to see a grassroots - if you will - movement where people are printing their own objects at their house, or at their work, or at their desktop, and i think that trend is going to continue for several more years." > > for first business news, i'm ky sisson. with demand for the new 3d printing, rapid tech grads are finding work with companies such as nike and boeing. still ahead, the oscars are kicking it up a notch this year. find out how next in movies and money.
teenagers ruled at the box office. our movie guy is here with the back story on "warm bodies." good to have you on the show this morning erik. what happened? a lot of teenage romances out there? > > i am really happy that "warm bodies" won the box office, because it's actually a very sweet movie, as zombie movies go, so i am very happy that this sort of anti- "twilight" movie took the top spot. > here is what else happened at the box office over the weekend: "warm bodies" leading by $20 million. and really the numbers just plunge after that. > > pretty much.
> you have "hansel & gretel" coming in at $9 million, "silver linings playbook" still catching that oscar buzz at the box office with $7 million, "mama" at $6.5 million, and "zero dark thirty" - i really want to see this film, a lot of people love it - at $5 million. > > the film that is not on the top five you just saw is sylvester stallone's "bullet to the head." > what happened there? > > $4.5 million. pretty much, numbers-wise, the worst opening of stallone's career. he had films in the '80s when the ticket prices were half as much that did better than this film. so it is a real disappointment for him and warner brothers. > it was a bust. here is what's coming up this weekend, a couple of films to look forward to: "identity thief," which has melissa mccarthy from "bridesmaids." > > she has really turned into quite a star, and i think this is going to be another good hit for universal, after they had "mama" do very well this year, i think this is going to rule the box office pretty handily with around $25 million this weekend. > you enjoyed the film?
> > i haven't seen it. > you haven't seen that one, but you have seen "side effects." > > i have seen "side affects." this is steven soderbergh's latest film, and this is a really good thriller that i think people- it is a very hard movie to advertise, but i think if people give it a shot, with jude law and rooney mara, they are really going to be surprised and are really going to enjoy this movie. > there were a number of stories this week happening out of hollywood, including dreamworks animation laying off workers. what is the story there? > > it is kind of interesting. last year "madagascar 3" was a huge hit for them, $740 million worldwide. but then the holidays came and they had "rise of the guardians," which i think very much underperformed for them. they thought that might turn into a franchise. it kind of struggled to make $100 million here in the states. about $300 million overall. so i think the disappointment of that sort of led to them sort of almost writing off 2013. > we are gearing up for the oscars. there are a number of oscar stories as well. the oscars have sold ads. that is a plus. > > yeah, not a surprise. > and also they say they are going to take the boring out of the oscar show this year. > > yeah, they say that every year. and it never happens. 3.5-hour show. we're still going to get a dance number, we are still going to get 16 montages that we don't need. whatever. just give out the awards. > as a chicago film critic you have your own critic show coming up, right? > > yeah. this weekend,
saturday night, at the movieco theater in rosemont, the chicago film critics' association is giving out their awards. this is a chance for the public- you can buy tickets to this thing, there are still tickets available. for $50 you can come catch the show. $99 you get the afterparty. you can hang with some of the stars, including jane lynch, who we are giving the comedy award to, paul sorvino was recently connected to the show, so he'll be given an award. a lot of special guests, a lot of celebrities are going to be showing up. > and you will be there. asking questions. > > i will. i will be presenting as well. so come and see me. > thank you erik. > > thank you. coming up, dreamworks is back in the spotlight. find out if the stock is a rising star!
stock? > > this is a stock that is going to fluctuate based on what kind of movies they have in the pipeline, what they have going on. back in january 2010 it was all the way up to $40. it's had kind of a rough go. shelving the one movie, pushing back "mr. peabody & sherman," i think is a big sign. i see support for the stock around $16, so if you want to get in, maybe do a little bottom fishing, that is where i would do it. i would limit my losses to the $16 range. but this stock is probably one that is not going to move too much in the interim unless some other news comes out. > and fans, that movie will come out in november, we are told. moving on to coinstar, which comes out with earnings after the close, what do you see in the charts on this one matt? > > this is a really interesting play. the stock has had a nice little run over the last three months. it is up about 10% or so. analysts have also increased their expectations just a little bit as far as how they think that coinstar is going to do. but the really big thing that jumps out at me here is that this is a very heavily shorted stock. we saw a lot of options volume on the call side in this stock yesterday, so i
think that if they come out and blow out their earnings, this is a stock we could really see explode. i see support for the stock around $50 a share, and, you know, this is one of those things where, if it does do even just a little bit better than expected, you could see these people who are short the stock rush right back in to buy it and pushing it much higher than it normally would go. so, definitely wanted to keep an eye on it, and don't get caught in it. > thank you matt. we have been looking for those short squeeze stocks, so thanks for your time and your thoughts today. have a good one. > > thank you. we have to roll out of here for today. coming up tomorrow in traders unplugged, our traders are shopping for stocks, and they are making a stop at costco. find out if the stock is bargain. from all of us at first business, thanks for joining us. have a great thursday!